Operating a Real Estate Office I Flashcards
T/F
An applicant for a broker’s license in the name of a legal entity must meet all of the qualifications to be a broker.
True - DOS will only issue a broker’s license in the name of a legal entity when the person applying meets all the qualifications to be a broker.
T/F
A sole proprietor who wants to run a brokerage and conduct business under their personal name only would need an individual broker license
True
What does one need to be licensed as if a broker creates their business as a sole proprietorship and does business under a name OTHER THAN THEIR PERSONAL NAME
Trade Name Broker
Marcie Owens has been a real estate sales agent for 10 years and is ready to step out on her own and open “Marcie Owens Realty” Which broker license will she apply for?
Trade Name Broker - she has “named” her company “Marcie Owens Realty”.
T/F
Within a corporation, property is owned in severalty as the legal person
True
What is ownership in severalty?
Occurs when the property is owned by one individual, corporation, or other entity
What are the tax implications of a C Corp?
Must pay corporate income tax + when profits are distributed to shareholders, they pay income tax as well
This leads to double taxation
What are the tax implications of a S Corp
Does not pay corporate income taxes (functions like a partnership)
Corporation’s income/losses are dived among and passed through to its shareholders.
Shareholders then report the income/loss on their own individual tax returns
*S Corps are not recognized in NYC so they must pay corporate taxes
T/F
A Salesperson licensed with a corporation that holds a real estate broker’s license MAY NOT BE A CORPORATE OFFICER OR OWN ANY VOTING STOCK in that corporation
True
General Partnership
Partnership in which each member has an equal right to manage the business and share in the profits, as well as equal responsibility for partnership’s debts.
What is the difference between tenancy in common vs. joint tenancy?
joint tenancy - the interest of the deceased owner is transferred to other owner(s)
tenancy in common - interest of the deceased owner is transferred to their heirs
What is tenancy in entirety
is the interest when a married couple purchases real estate. each party has an undivided interested in the whole property
Are independent contractors statutory employees? If so, why?
Yes, they are independent contractors specifically classified as employees by statute for Social Security and medicare taxes
They are not treated as employees for the purposes of income tax withholding.
T/F
A real estate licensee could be classified as a statutory employee by the IRS
False
What is an employee?
A person whose results are mandated by the employer and the employer controls how the results are accomplished
What is an independent contractor?
One who controls the means and methods of accomplishing an assigned task; the paying entity has the right to demand the end result
What is a statutory Employee
Independent contractors specifically classified as employees by the statute for social security and medicare taxes
What is statutory non-employee?
One whise services are under written contract that states they wont be treated as employees for federal tax purposes
What is Errors and Omissions (E&O) insurance?
professional liability insurance that protects licensees from mistakes or negligence
What are the 3 classifications the IRS could classify a real estate licensee?
- employee
- independent contractor
- statutory non-employee
What year was the Sherman Antitrust Act?
1890
What is the Sherman Antitrust act of 1890?
The first federal law outlawing practices considered harmful to consumers, such as monopolies.
What year was the Clayton Antitrust Act?
1914
Why was the Clayton Antitrust act of 1914 passed ?
To enhance the Sherman antitrust act by prohibiting specific anticompetitive practices
When was the Federal Trade Commission (FTC) Act passed?
1914
What are the 3 main components of the FTC?
- prevent business practices that are anticompetitive or deceptive or unfair to consumers
- enhance informed consumer choice and public understanding of the competitive process
- accomplish this without unduly burdening legitimate business activity
What is blockbusting (panic selling)?
intimidating homeowners into selling their homes by suggesting that the ethnic or racial composition of their neighborhood was changing.
What is illegal per se?
a particular act is defined as illegal in the law, either in statute, a constitution, or through case law, and is so obviously harmful to competition that detailed analysis of the activity is not required.
What are 4 illegal per se activites?
- price fixing
- group boycotting
- allocating customers or market territories
- tie in agreements
T/F
If a local real estate board publishes a suggested commission schedule but does not mandate that members follow it, it would NOT be considered an antitrust violationT.F
False - this is price fixing
T/F
Two or more brokers who conspire to divide their customers in any way are guilty of violating antitrust laws against allocation
True
What is a tying agreement (tie-in agreement)
when someone tries to make one transaction or agreement contingent on a second transaction or agreement
Antitrust laws are in place to ensure that _____
competition in the marketplace is fair and unrestrained
